by Ken Starr
Hickman told us the jury found all three defendants guilty on multiple counts. As we listened to CNN, the prosecutors whooped and cheered as each defendant’s name and verdict was announced. Jim McDougal had been convicted of eighteen counts of fraud and conspiracy, Susan on four counts of fraud and conspiracy, and Tucker on one count of conspiracy and one count of mail fraud. It was an overwhelming victory. The press’s pessimistic predictions had been proved wrong.
One juror told the New York Times, “It was the documents we went with. The documents told me more than the testimony did.” The months-long burden had at long last been lifted. I had grown weary of the unrelenting assaults and naysaying. Thanks to an honorable judge and a God-fearing jury, justice had been done.
Our office was inundated with calls from reporters. In shirtsleeves, I went out in front of our office and made a short statement: “We march forward from here.” I had learned to “feed the beast.”
Clinton was subdued in his reaction. A White House statement said he accepted the verdict, and noted he had not been charged in the case. Asked whether his testimony in defense of McDougal had not been believed by jurors, Clinton replied, “You ought to ask them that. . . . I doubt that that’s what was going on.” Though he was sad for the defendants, “for me, it’s time to go back to work, and I intend to do that.”
In his later autobiography, My Life, Clinton wrote that he had serious doubts about the verdicts: “Jim McDougal’s mental illness had progressed to the point where he was probably not competent to stand trial, much less testify. And I felt that Susan McDougal and Jim Guy Tucker might have been caught up in Jim McDougal’s downward mental spiral and David Hale’s desperate effort to save himself.”
Whether the president truly believed this nonsense isn’t for me to say. What I can say is that we did not believe that Jim McDougal, although ailing, was mentally incompetent in the slightest. We immediately moved forward with the presentencing phase. We would now seek cooperation from all three convicted defendants. We believed all three would be in a position to know if possible crimes had been committed by Bill and Hillary Clinton, and others in their orbit.
Tucker announced that he would step down as governor on July 15, just a little over one month away. He would have loved to unload on the Clintons, both of whom he had come to despise. Hillary, after all, had peeled away an important client and Bill was his political adversary. But Tucker’s indictment for tax and bankruptcy fraud had been reinstated by the Court of Appeals. He thus faced further jeopardy. His cooperation would have to wait for another day.
That left Jim and Susan McDougal, two people who had once loved each other but now found themselves in a strange situation. Though divorced and engaged to another man, Susan had repeatedly professed her affection for Jim. Now both of them faced time in prison. Helping the prosecutors make cases against others who committed crimes could shave significant time from their sentences.
When he testified, Jim had dumped her in the mire. His testimony had laid bare the fact that she had been involved in financial misdeeds at Madison Guaranty, and Susan was furious. We hoped that she would take her revenge on him by talking, but that hope was soon dashed.
Susan’s first question for us was not terribly helpful. In the immediate aftermath of the verdict, during a presentencing hearing, Susan’s public defender approached our lawyers and inquired what we wanted to ask her in the grand jury. Would there be questions about Bill Clinton and sex?
Ray Jahn told her that wasn’t our particular area of interest, but if the issue became pertinent, questions about that subject might be asked. We later learned that the attorney had immediately called the White House.
After that, Susan clamped down. In another meeting, she insisted, “You just want me to lie about the Clintons.”
We repeatedly told her that all we wanted was the truth, whatever it was, but that was her mantra and she stuck to it. A subpoena requiring her to testify before the grand jury was issued, and our battle with the indomitable Susan McDougal was on.
CHAPTER ELEVEN
“Get Out the Vote Money”
Within a few weeks of finishing the 825 trial, we were back in court for what we felt was a strong court case related to Bill Clinton.
A different odd couple, two bankers who owned a tiny financial institution in a rural area of Arkansas, had been indicted on campaign finance fraud committed on behalf of Governor Clinton during his fifth gubernatorial campaign in 1990. Bruce Lindsey, national director for Clinton’s 1992 presidential campaign and later a senior White House staffer, was an unnamed, unindicted coconspirator. If we got convictions, we hoped the bankers would cooperate and testify about the campaign finance shenanigans that seemed to permeate Clinton’s political apparatus.
We were about to get schooled by some good ol’ boys who saw the Clintons as heroes and us as interlopers.
Perryville, a small town forty-five miles northwest of Little Rock, was home to a small bank with a modest $45 million in assets. Perry County Bank (PCB) had two Clinton-friendly owners, Herby Branscum Jr. and Robert Hill. They, through the bank, lent financial support to the Clintons during the hard-fought gubernatorial reelection campaign. The governor needed a big win in 1990 to set the stage for a presidential run in two years.
In July 1996, we entered Judge Wright’s courtroom for a six-week trial that opened a window into the fund-raising by Branscum and Hill on Bill’s behalf. Branscum and Hill had used bank funds to reimburse themselves for get out the vote money for the campaign. They had instructed young bank president Neal Ainley to intercept and deep-six the reports. We alleged they conspired with Bruce Lindsey to hide the large cash withdrawals from federal regulators.
Though huge sums of money weren’t at stake, this was not just political sleaze, it was criminal conduct. That’s the way the Fiske team saw it, and that’s the way the Arkansas grand jury saw it. The bank’s owners had been indicted on eleven counts of conspiracy and bank fraud. If we could obtain their convictions, we might be able to get the men to talk about other campaign finance misdeeds.
During the course of the grand jury investigation, the two bank owners refused to comply with subpoenas seeking various financial records. Branscum and Hill claimed that the independent counsel had no jurisdiction over campaign funding issues. After lengthy wrangling in court, the two bank owners went into civil contempt and sustained heavy fines that were levied for each day they disobeyed a court order to produce the records.
It was either give up the documents or pay ever-mounting fines. The financial hammer worked. We got the documents, which were indeed relevant and damning, and prepared for trial. We had a strong case, a confident and articulate witness in Neal Ainley, who pleaded guilty and agreed to cooperate, and two star prosecutors in Hickman Ewing and Jackie Bennett.
I was still banned from the courtroom, but reports came to me once again in the basement annex. I heard that on the stand Ainley proved to be a disappointment. He appeared nervous, weak, and unsure of himself. He didn’t recant any of his testimony, but he was unimpressive.
Hickman was under tremendous pressure. His father was dying. Just prior to his closing arguments, he drove to Memphis and said goodbye to his father. That night he drove back to Little Rock. At 2:00 A.M., on the last day of trial, he was informed that his father had just died. That morning, he rose early and, by all accounts, gave a brilliant, Oscar-winning closing argument.
Rebutting the bankers’ contentions that Ainley acted on his own, Hickman argued that “the monkey works for the organ grinder; the organ grinder doesn’t work for the monkey.”
Our confidence was high. We had the facts and we had the law. But despite Hickman’s heroic efforts, Branscum and Hill’s bold gamble to go to trial paid off. The jury acquitted them both on four counts, and hopelessly deadlocked on the remaining seven counts.
After the trial ended, with the judge’s permission Hi
ckman interviewed the jurors individually. Most were perplexed as to why two of their peers remained stubborn holdouts. One African American juror was convinced Branscum and Hill were guilty on all counts. This went against the consensus that Clinton’s popularity in the African American community would result in some sort of jury nullification. We had done our job, the jurors insisted, and the evidence against the two bankers had been overwhelming.
The two holdout jurors were white, blue-collar men. One dismissed the charges with a shrug. It was the owners’ bank. They could do what they wanted with the money. And who cared about trivial stuff like filing federal paperwork?
This was bizarre reasoning, and we suspected skullduggery in the form of jury tampering, but we had no evidence to back that up. The other possibility? We speculated that the anti-Starr bias was finally seeping into the courthouse, even though I had remained quarantined in the basement.
I feared this was a harbinger of bad things to come. The political attacks had taken a significant toll. The rich bank owners went scot-free. My only consolation was that their contempt had resulted in accumulated fines exceeding eighty thousand dollars.
We had to decide whether to retry Branscum and Hill. If we did, would we name the person dubbed by the charging document as the “unindicted coconspirator”?
Despite the strength of our case, we decided to call it quits. At this stage, we determined our duty was to prioritize, and to stay focused on the ultimate question of the Clintons’ involvement in Whitewater and the illegal use of federally insured funds.
CHAPTER TWELVE
Mysterious Disappearing Documents
One day in August 1995, White House aide Carolyn Huber, the office manager of the Rose Law Firm when Hillary worked there, by her account spotted a stack of documents lying on a table in the middle of the Book Room on the third floor of the Residence at the White House.
The room was next door to the First Lady’s office, rarely used by others. Among the magazine and newspaper clippings, Huber recognized one computer printout as Rose billing records. Showing little curiosity, Huber simply boxed the documents up and took them to her own office in the East Wing, stuck the box on a shelf, and forgot about them.
Strange behavior, since the Rose Law Firm records had been under subpoena since 1992, first by the RTC, then Fiske, then the OIC and a Senate committee. Huber had been tasked with finding the records for all of them.
In April 1994, Mrs. Clinton had responded to the press assaults on her credibility—about Whitewater, Hillarycare, the missing Rose Law Firm records—with what became known as the “pink press conference” for the White House press corps.
Dressed in a pink sweater with black trim, her hair beautifully coiffed and her voice well modulated, Hillary dazzled press and public alike. She cited her “fundamental belief” in privacy, citing unprecedented attacks on their administration. It was a tour de force. But behind the scenes, turmoil was engulfing the Clinton White House. Fiske was digging deep into Whitewater and crimes committed by Hubbell and other associates. The missing documents had not surfaced then. Nor had Huber sounded the alarm in August 1995, despite the intense publicity generated by Hillary’s press conference.
Finally, on January 4, 1996, Huber unpacked the box of documents sitting in her office. By her account, she was “taken aback” when she realized they were Hillary’s mysterious Rose Law Firm billing records. They had been printed out in Little Rock on February 12, 1992, during the presidential campaign.
Called to testify in front of a Senate committee in January 1996, Huber said they’d suddenly appeared in 1995, but she hadn’t recognized their significance.
“I didn’t know who left them there,” she said. “Somebody did.”
Huber’s dramatic testimony raised the issue of obstruction of justice. The OIC had been trying to get to the bottom of the disappearing records and other issues related to Whitewater and Madison Guaranty. The pressure had been building.
The White House offered no further explanation. Hillary said she had “no idea” where they came from.
The discovery confirmed Hickman’s “the molecules were moving” theory. Destroying the records would have been a federal crime. Hillary needed for them to be “discovered.”
These were the only records relevant to a Little Rock criminal investigation to find their way to Washington, then to the White House, then to the Residence. It stood to reason that only three people could plausibly have taken them from Little Rock: Hillary, Hubbell, or Foster. It would be safer to have them in the White House, closer to Hillary. That made Foster the logical thief.
In a statement, David Kendall said that Hillary said they remembered discussing the billing records with Foster and Hubbell during 1992, so she could “accurately” answer press questions during the campaign.
“It is possible they showed her the billing records then, but she does not recall,” Kendall wrote. He added that Hillary was glad they had been found because they proved everything she had said about representing Madison was accurate.
Not true.
Her defenders, for once, were muted. Washington, D.C., had been blasted by a blizzard. Columnist William Safire published an Op-Ed called “Blizzard of Lies,” marveling at Hillary’s many prevarications about the firings at the Travel Office, the FBI files, vanishing records, and cattle futures. Safire dubbed Hillary “a congenital liar.” Bill threatened to punch him in the nose.
We believed that the records had been removed from Vince Foster’s office after his suicide; that investigation was ongoing. But how did the documents make it to the Book Room in the Clintons’ residence?
The OIC demanded that the records be turned over immediately so that they could be examined for fingerprints by the FBI. But Kendall resisted, saying he had to examine and copy them first. That prompted our team to joke that he’d go over them while eating fried chicken.
When we got the records the next day, we saw handwritten notations to “HRC,” apparently made by Foster. He had clearly been worried about what the documents revealed about Hillary’s legal work for Madison Guaranty. And to add to the mystery, both Foster’s and Hillary’s prints were found on the records.
The president, of course, rose to the occasion as a character witness for the First Lady. On January 11, 1996, Clinton vouched for his spouse: “I wish all Americans were as honest as Hillary.”
CHAPTER THIRTEEN
Flipping Jim McDougal
With the convictions in the 825 trial, our investigation into Whitewater took on new importance. What information might the McDougals reveal to the prosecutors and FBI agents? This was unprecedented and worrisome, since Clinton’s political missteps—including the ill-fated health-care reform effort led by Hillary—had contributed to the historic Republican landslide in the 1994 off-year election.
Though humbled, Bill Clinton was determined to live up to his moniker as the Comeback Kid. He was charmingly persistent, resilient, and relentless.
The president’s reelection prospects that fall seemed bright. The nation was at peace, the economy was doing well. International relations were quiet enough, notwithstanding the growing menace of North Korea and the always fragile boiling pot of the Middle East. America was happy. Government was divided, with adequate checks and balances in place.
The president was heeding the counsel of his on-again, off-again political consultant Dick Morris: Show a spirit of bipartisanship, stay humble, and be out and about all over the country.
The president faced a weak Republican candidate, the much-admired but aging Bob Dole. Clinton, the first baby-boomer nominee, had defeated Bush, a World War II hero, in 1992, and now the stage was set for him to dispatch the last presidential candidate from the Greatest Generation. Against that historic shift of political power, Whitewater was seen as an irrelevant episode from long ago and far away.
Meanwhile, in Little Rock, our team�
��s continued success was largely dependent on the cooperation of one of the McDougals. Our goal remained: get to the bottom of the Whitewater deal, especially the issue of any potential culpability on the part of the Clintons, as quickly as possible and be done. I had already devoted far more time than I had originally, and erroneously, anticipated.
In theory, we were operating from a position of strength in the wake of our success in the 825 trial. Yet we knew that a long slog was ahead of us, especially since all three defendants were appealing their convictions.
We went back to Hale, whose sworn trial testimony was damaging to the president. But we still lacked clear documentary evidence to back up his charges.
One Hale-Clinton encounter had taken place at the Capitol. Clinton encouraged Hale to provide funding for the Master Marketing loan. But it was a classic case of “he said” versus “the president said.” No reasonable prosecutor would seek an indictment based on that slender reed. The challenge was how to get corroboration, if any existed, to the effect that the Clintons were more than “passive” investors in the ill-fated development project.
Our most promising prospect for collaboration was Jim McDougal. Unemployed and broke, Jim was again living in the trailer on the property owned by Lieutenant Governor Bob Riley’s widow, Claudia. With his health failing, Jim was fearful of imprisonment, even in a comparatively humane federal prison, with ready access to good medical care. Jim had a premonition that if sent to prison, he would die there—not from foul play, but from the stresses and strains on his weak heart.
Jim’s trial lawyer, Sam Heuer, seemed genuinely to want the best for his ailing client. But Heuer had a close working relationship with the Clintons’ defense lawyers. We had reason to believe that David Kendall and his colleagues had drafted some of Heuer’s trial motions, and may have encouraged Jim to take the stand. But we had confidence that Heuer would be amenable to encouraging Jim to do an about-face.